Hachette Joins Ebook Pricing Game

Hachette Book Group is throwing its support behind changing how publishers charge customers for electronic versions of books, according to GalleyCat. Hachette is the second major publisher to toss its hat into the agency pricing ring following Macmillan's high profile clash with Amazon.com.

"There are many advantages to the agency model, for our authors, retailers, consumers, and publishers. It allows Hachette to make pricing decisions that are rational and reflect the value of our authors' works," Hachette CEO David Young said in a email to resellers. "In the long run this will enable Hachette to continue to invest in and nurture authors' careers -- from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer."

Macmillan pushed Amazon.com into agreeing to an agency-based pricing model earlier this week in what became a public battle. Amazon.com initially resisted the change because it would result in higher ebook prices.

Macmillan, one of the 'big six' publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases," Amazon said at the time.

Amazon.com has since relented, and will offer Macmillan ebook titles at the publisher's higher prices starting in March. Since Macmillan has already opened the door to agency-based ebook pricing, Hachette won't likely have any problems imposing its new pricing scheme on Amazon.com as well.

Amazon.com isn't the only ebook reseller that will have to deal with Macmillan and Hachette's new pricing structure. Apple's iPad rolls out in March with iBooks, the company's ebook reader app, and the iBookStore where customers can purchase ebooks online, and both publishers have already committed to offering titles for the iPad.

As far as I know, the last paragraph is misleading. My understanding is that Macmillan went to Amazon and said “this is what Apple is offering us; we want you to do the same”.

In Apple’s model, the “retailer” becomes a thin layer. Functionally, iTunes connects the consumer and the publisher directly, with Apple charging a commission on every sale. For physical goods, there’s an entire retail and distribution market between the publisher and the consumer. Apple’s model flattens that market almost out of existence.

Yes, this gives publishers a heck of a lot more control over the retailing of their own products. It also encourages marketing and innovation between the products, rather than methods of retailing identical product (which is what you get with competition between distributors / retailers).